{"id":7901,"date":"2018-02-27T11:42:41","date_gmt":"2018-02-27T18:42:41","guid":{"rendered":"http:\/\/nigerianews.ca\/?post_type=news&#038;p=7901"},"modified":"2018-03-03T17:52:56","modified_gmt":"2018-03-04T00:52:56","slug":"further-fuel-price-hike-could-trigger-unrest-diminish-pmbs-electoral-chance","status":"publish","type":"news","link":"https:\/\/nigerianews.ca\/news\/further-fuel-price-hike-could-trigger-unrest-diminish-pmbs-electoral-chance\/","title":{"rendered":"Between a rock &amp; a hard place as further fuel price hike could trigger unrest &amp; diminish PMB&#8217;s electoral chance"},"content":{"rendered":"<div class=\"lede-text-only lede\">\n<div class=\"lede-text-only__container\">\n<ul>\n<li>Oil-Rich Nigeria Fuel Scarcity Weighs on Buhari&#8217;s Popularity<\/li>\n<li>Shortages hit a year before general elections in 2019<\/li>\n<li>Government\u2019s fuel subsidies foster dearth of supplies<\/li>\n<\/ul>\n<p>Lines of cars and trucks snaking around blocks in the center of the Nigerian capital, Abuja, highlight the state\u2019s failure to fix a problem that\u2019s bedeviled Africa\u2019s biggest oil producer for decades: fuel shortages.<\/p>\n<p>A new round of gasoline scarcity that\u2019s gripped Africa\u2019s most populous nation since December comes at a bad time for President Muhammadu Buhari\u2019s government. During his campaign to win office in 2015, he promised to solve the problem. With three years of his four-year tenure gone and elections looming next year, there\u2019s little sign he will.<\/p>\n<p>\u201cIt\u2019s something Nigerians have come to expect,\u201d said\u00a0John Ape, a 42-year-old computer salesman in Abuja. \u201cPeople seem to have lost all trust in the government that this will be permanently solved one day. And that reflects badly on the Buhari administration.\u201d<\/p>\n<p>Oil-rich Nigeria lives a paradox: it agonizes when crude prices fall, then suffers when they rise. With four ill-maintained state-owned refineries working at just a fraction of their capacity, it depends on gasoline imports to meet domestic needs. Without building any new refineries in more than 30 years, successive governments have subsidized imports, through a system riddled with patronage and corruption, to ensure lower prices.<\/p>\n<p><strong>Subsidy Payments<\/strong><\/p>\n<p>As crude prices recovered in the past year, outstanding subsidy payments due to fuel importers have mounted, now exceeding $2 billion, forcing them to suspend gasoline orders. With the state-owned Nigerian National Petroleum Corp. left as the sole importer of gasoline, long lines have persisted since December at gas stations across the country as shortages ensued.\u201cSince Nigeria imports a greater share of her fuel needs, the country is at the mercy of global crude oil prices,\u201d said Pabina Yinkere, an energy analyst at Lagos-based Vetiva Capital Management Ltd.<\/p>\n<p>\u201cA rise in crude oil prices translates to higher product-landing costs and vice versa.\u201d<\/p>\n<p>On the streets, that\u2019s meant long hours, even days, spent in search of gasoline in mile-long lines outside gas stations, the disruption of transportation and higher costs. It\u2019s not helped by smuggling of Nigerian gasoline across the borders into neighboring countries where prices are twice as high as in Nigeria.<\/p>\n<p><strong>Pricing Issue<\/strong><\/p>\n<p>\u201cWe are working round the clock on this,\u201d Minister of State for Petroleum Resources Emmanuel Kachikwu said Feb. 19.\u00a0\u201cWe would address the fundamental policy issues to enable it to go away, especially in an area where the pricing is showing a differential between the landing price and the sale price.\u201d<\/p>\n<p>Even with improved oil prices, government finances are still too fragile to shoulder the full burden of fuel subsidies. Nigeria depends on oil exports for more than two-thirds of government revenue and at least\u00a090 percent of export income.Brent crude rallied 40 percent since the middle of last year as OPEC and allied producing nations stick to agreed output curbs.<\/p>\n<p>The global benchmark traded at about $67.43 per barrel at 12.49 pm in London on Tuesday.When crude prices plunged in 2014 and attacks by militant groups in the oil region depressed output, the country of more than 180 million people fell into its worst economic slump in 25 years.<\/p>\n<p>Production hasn\u2019t returned to full capacity.The debt owed to fuel-marketing companies will continue to increase the longer the government delays payment, according to Obafemi Olawore, the executive secretary of the Major Oil Marketers Association of Nigeria.<\/p>\n<p><strong>\u2018Moving Target\u2019<\/strong><\/p>\n<p>\u201cIt\u2019s like a moving target,\u201d he said by phone from Lagos, the commercial capital. \u201cIt continues to increase every month when the banks slam the interest charges.\u201dTo deal with the current shortages, NNPC, as the state oil company is known, has spent $5.8 billion to import gasoline since December, Maikanti Baru, group managing director, told a Senate committee in Abuja on Feb. 21.<\/p>\n<p>In the short term, the government could help fuel importers by supplying them\u00a0foreign exchange at a lower rate, effectively providing a dollar subsidy, or by allowing retailers to bring in gasoline and sell at higher than the official price,\u00a0according to Dolapo Oni, Lagos-based energy analyst at Ecobank Research.<\/p>\n<p>\u201cInstead of deregulating the downstream petroleum sector, they want to control the price of fuel,\u201d Kingsley Moghalu, a former deputy governor at the central bank, said in reference to the current administration. \u201cAnd what do you get? At the end of the day, fuel scarcity is crippling economic activity all over the place.\u201d<\/p>\n<p>For the longer term, the government appears to be pinning its hope on the completion of the 650,000 barrel-a-day refinery being built in Lagos by Aliko Dangote, Africa\u2019s richest man. Scheduled to begin production in mid-2019, it\u2019s designed to meet Nigeria\u2019s needs and have surplus for export.Before then, Buhari\u2019s government will remain inclined to maintain the subsidies to ensure lower prices until at least the elections are over.\u00a0\u201cThe administration is now caught between a rock and a hard place,\u201d Malte Liewerscheidt, London-based analyst and vice president for risk advisory Teneo Intelligence said in a phone interview. \u201cIt fears that any price increases would trigger social unrest and diminish its electoral chances at the February 2019 polls.&#8221;<\/p>\n<p>By Elisha Bala-Gbogbo\u00a0\u00a0and\u00a0 Yinka Ibukun for\u00a0bloomberg.com<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Oil-Rich Nigeria Fuel Scarcity Weighs on Buhari&#8217;s Popularity Shortages hit a year before general elections in 2019 Government\u2019s fuel subsidies foster dearth of supplies Lines of cars and trucks snaking around blocks in the center of the Nigerian capital, Abuja, highlight the state\u2019s failure to fix a problem that\u2019s bedeviled Africa\u2019s biggest oil producer for [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":7902,"comment_status":"open","ping_status":"closed","template":"","tags":[],"news-category":[323],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Between a rock &amp; 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